The UK’s Defined Benefit (DB) pension schemes have reached their strongest financial position ever, with a growing surplus that could unleash up to £160 billion to fuel economic growth and
secure the future of millions of savers.
Pension Funding Hits Historic High
Three out of four DB pension schemes are now in surplus—where assets exceed future pension promises—marking a major turnaround since 2010. The number of well-funded DB schemes has tripled in that time, rising from 600 in 2019 to over 1,800 in 2024.
This financial strength has sharply reduced the need for top-up payments from employers, with annual deficit contributions falling from £16 billion in 2010 to under £5 billion today. The total collective deficit among underfunded schemes has shrunk from £500 billion in 2019 to just £140 billion in 2024.
New Rules to Unlock Investment
The Government’s forthcoming Pension Schemes Bill aims to give trustees and sponsoring employers more flexibility to release a portion of these surpluses. Currently, many schemes are unable to access surplus funds even when their financial position is secure. The proposed changes would allow surpluses to be reinvested in businesses and used to benefit members—while maintaining strong protections for savers.
A Boost for Business, Savers, and Growth
Pensions Minister Torsten Bell welcomed the development, stating:
“Record funding levels in DB schemes are great news for both employers and workers. Falling deficit payments free up over £10 billion a year in cashflow, which can be used to support higher wages and investment. With our new reforms, even more of this surplus can be used productively—to benefit savers and the wider economy.”
Part of the Government’s Plan for Change
These reforms are central to the Government’s broader strategy to boost long-term growth and improve the financial wellbeing of UK workers. By making it easier to safely access pension surpluses, the changes aim to unlock capital for investment and support economic prosperity while ensuring scheme members remain fully protected.